The government has capped the subsidy it will pay on kerosene at Rs 12 per litre while deciding to foot the entire bill on domestic cooking gas, a senior official said.
The Finance Ministry will pay Rs 12 per litre in cash to state-owned fuel retailers and any unbridged gap between the retail selling price and the cost of production will be borne by upstream companies like ONGC, he said.
Currently, oil companies sell kerosene at a loss of about Rs 18 per litre. Of this, the government will foot Rs 12 and the rest will come from upstream firms.
"At current oil prices, the upstream share for the full fiscal may be Rs 5,000-6,000 crore," he said.
For LPG, the government has decided to fully bear the difference between the cost and the retail selling price.
The Budget for 2015-16 has provided for Rs 22,000 crore towards LPG subsidy and another Rs 8,000 crore on kerosene.
"While provisioning for kerosene is sufficient, additional funds may have to be provided in supplementary demands for LPG ," he added.